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Business Bank Accounts

Are you looking for a business bank account but not sure which one to choose? Banks love business customers and are falling over themselves to sign you up. Why? For the simple reason that they know that they will make a shed load of money from you once you sign with them.

This is how they do it:

But most of all they know that people almost never change their business account so even if they have to give you an incentive, once you open one then they know they have pretty much got you for life.

Think about your life time value to a bank. If you paid £20 a month in bank charges over the life of your business (say 20 years) then you will give them nearly £5,000 just for the privilege of looking after your money.

So, how do you go about getting a good deal?

Well, the first thing to ask is do I really need a business bank account?

Most banks or building societies are quite happy to open a 2nd account for you or you could just open a new one with different provider. For a small sole-trader business this is perfectly adequate and there is no reason for you to be paying any charges.

The most important thing to remember is to keep your business and personal finances strictly separate because this makes all the accounting, admin, tax and VAT much, much, easier to organise.

If you are running your own limited company, however, you really ought to open a business bank account - not least so that you can receive your interest tax free but really because it helps to put your business on a proper professional footing.

The second thing to consider is what you want from your bank. Do you just want a basic admin service or do you want to borrow money?

If you want a basic admin service then just look for the best deal on free banking that you can get.

If you want to borrow money then your best bet is to visit at least four different banks local to you and talk to the business manager. Find someone that you are comfortable with and who seems helpful and friendly. This relationship is going to be very important to you in the future so choose the right person.

You wouldn't get married without finding out all about your partner would you? If you want to borrow money then treat your bank business manager as a potential partner and get to know them.

Who should you open an account with?

Most of the organisations listed below offer free banking. Watch out though - with some it's only for 12 months, others only 18 months and with just a few it's for life (with some conditions).

The free banking for life providers will expect you to keep the number of transactions down.

Have fun exploring:

More advice on opening a small business bank account...